Generic Drug Gains and Grumbles

All the reports on the rise and fall in drug spending have one common feature: most savings come from increased use of generic drugs. Low-cost copycat medicines now account for more than 80 percent of US prescriptions, the number rising in recent years as more blockbuster therapies have lost patent protection.

The trend has heightened competition between generics and innovator products, as seen in heated battles over access to brand supplies for testing purposes and efforts by brands to delay approval and sales of biosimilars. A controversial Food and Drug Administration decision last month blocked generic makers from selling copycat versions of the original OxyContin painkiller when its patent expired April 16. The agency instead approved labeling citing anti-abuse features of a newer formulation of the product marketed by Purdue Pharma since 2010. Considered a "gift" to Purdue, the decision reflects pressure from state and federal officials who opposed FDA approval of cheap, easily abused drugs that would further fuel the epidemic of prescription drug abuse raging across the nation.

The fight for market share is just as intense on the international front, as seen in the recent landmark patent case in India (see sidebar). In the United States, though, generic makers and brands are allied in contentious Supreme Court cases. Meanwhile, generic drug manufacturing problems have led to serious shortages in key therapies, prompting FDA to propose new strategies for ensuring product quality that have disrupted regulatory operations.

Supreme decisions

Generic and brand companies are watching closely for two key rulings from the Supreme Court in June. The FTC v. Activis case (docket no. 12-416) has received extensive media attention as it challenges "pay-for-delay" patent settlements between brand and generics manufacturers that determine when a generic competitor comes to market. The Federal Trade Commission has long attacked "reverse payment" deals as anti-competitive and harmful to consumers and now wants the court to declare them per se illegal. Both brand and generics firms counter that the arrangements avoid costly litigation and actually permit generics marketing prior to patent expiration. Democrats have proposed legislation to ban these settlements and will try to move forward if the high court fails to squash the deals.

The Mutual Pharmaceutical Co. v. Bartlett case (docket no. 12-142) is more technical, but raises important questions about whether lower courts can challenge FDA regulatory decisions, here involving when and how generic drug makers can revise labels to reflect important new safety information. A patient who took Mutual's generic drug and suffered hideous adverse events sued and won a $21 million judgment based on the company's failure to warn of the drug's potential dangers. Mutual argues that the long-marketed, anti-inflammatory and its label were approved by FDA, and the Justice Department agrees that states can't override federal regulatory policy, which would undermine the FDA approval process and open the door to multiple drug liability cases. This is the third case in recent years that has raised generic drug safety labeling issues, and there's growing pressure for statutory revisions that allow—or require—generics makers to add warnings to labels, even if the information differs from a reference product.